More Good News From the Commodity Complex

Today, we feature more “not bad” news: The “contrarian’s commodity,” natural gas, is holding steady in the face of a huge commodity correction. A major fuel for power plants, and the heating and cooling of homes, natural gas is so hated and beaten-down that gas bears can’t knock the price down much past $4 per thousand cubic feet (mcf). Here’s why…

We know from an industry contact that domestic gas production costs are running around $3.50-$4 per mcf. Companies can’t make money producing gas when prices are that low. The taps shut down.

This fundamental aspect of the gas market shows up in a bit of “common sense technical analysis.” You’ll note from the three-year chart below that natural gas simply refuses to fall below the $3.50-$3.75 level… even in the face of this week’s awesome selling pressure in the commodity complex.